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When it comes to starting a new business, many owners and shareholders have some difficulty deciding on the type of business to start. According to Anderson Advisors, there is no one-size-fits-all strategy. Here, we will be discussing the benefits of starting a C Corporation. Then, you can decide if this is the right direction for your new business.
What is a C Corporation?
There is a reason why C corporations are the most common types of corporations in the U.S.–because they offer unlimited growth potential through stock sales. That is right, you can sell stocks and attract some very well-heeled investors–especially if you have a product or service that meets current consumer demands.
Not to mention, there is no limit to the number of shareholders your corporation can have. So, imagine selling stock and making millions or billions in one day. That is just one of many major benefits to creating a c corporation.
Build Legal Protection
One of the easiest ways of building legal protection is through incorporation. Your objective should be to protect your personal assets from lawsuits or creditors. If you start earning a lot of revenue, incorporating can also cause a reduction in business taxes.
As a result, you gain increased flexibility and it’s easier to seek outside investment. In terms of federal income, C corporations are governed by the IRS. C corporations are the basic type of American corporation. The name comes as it is governed under the Subchapter C of the IRS Code.
In terms of a legal standpoint, C corporations can sue and be sued. With regards to taxes, they can pay tax at a special corporate rate which is different from those applied to individuals.
Easily Transfer Ownership
You can quickly and easily transfer ownership of your C corporation just by transferring the shares. You might endorse the back of the share certificate towards the new owner of the share. The change of ownership is then recorded in the corporation’s files.
Of course, if you are still carrying on business–then, the new owners will need representations from the seller of the shares and the corporation. In addition, state and federal law requirements must be met.
You Can Take the Company Public
If you see potential business growth, to where it can be traded on a national exchange–such as the New York Stock Exchange–then, it makes sense to form a C corporation. This is where the big money can start coming in, from investors and multitudes of shareholders.
It Exists Perpetually
Even if the owner leaves the company, the C corporation can exist. This is because it is a separate legal entity from the shareholders. In law, it continues as a corporation regardless of ownership. This helps with continuity of the business.
As you can see, forming a C corporation is one of the most popular methods of creating a business in America because you can make a lot of money with the right product and service. If you want to sell stocks and attract wealthy investors, this is the right type for your business.